Attached files
| file | filename |
|---|---|
| EX-31.2 - CERTIFICATION - China Green Agriculture, Inc. | f10q1217a1ex31-2_chinagreen.htm |
| EX-32.2 - CERTIFICATION - China Green Agriculture, Inc. | f10q1217a1ex32-2_chinagreen.htm |
| EX-32.1 - CERTIFICATION - China Green Agriculture, Inc. | f10q1217a1ex32-1_chinagreen.htm |
| EX-31.1 - CERTIFICATION - China Green Agriculture, Inc. | f10q1217a1ex31-1_chinagreen.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Amendment No.1)
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended December 31, 2017
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ____________ to ____________
Commission File Number 001-34260
CHINA GREEN AGRICULTURE, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 36-3526027 | |
| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification No.) |
3rd floor, Borough A, Block A. No. 181, South Taibai Road, Xi’an,
Shaanxi province, PRC 710065
(Address of principal executive offices) (Zip Code)
+86-29-88266368
(Issuer’s telephone number, including area code)
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| Non-accelerated filer | ☐ (Do not check if a smaller reporting company) | Smaller reporting company | ☒ | |
| Emerging growth company | ☐ | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 38,551,265 shares of common stock, $0.001 par value, as of February 9, 2018.
Explanatory Note
This Amendment No. 1 to the Quarterly Report on Form 10-Q/A is filed as an amendment to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2017 filed by China Green Agriculture, Inc. (the "Company") on February 13, 2018. The purpose of this Amendment No. 1 is to revise certain disclosures pursuant to the comment letter received from the SEC in connection with our filing of the Form 10-Q on February 16, 2018.
In this Amendment, the following changes were included:
● The disclosure of recent accounting pronouncements in Note 2 of Notes to Consolidated Condensed Financial Statements under Item 1 that ASU 2016-10, 2016-11, 2016-12 will be effective for us beginning July 1, 2018; and
● The disclosure of changes in inventories at the discussion of Liquidity and Capital Resources under Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This Form 10-Q/A has not been updated or modified in any other way and speaks only as of the date of the original filing, February 13, 2018, unless otherwise noticed. Accordingly, this Form 10-Q/A should be read in conjunction with the original filing and all filings made with the SEC subsequent to the date of the original filing.
TABLE OF CONTENTS
| Page | ||
| PART I – FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 5 |
| Signatures | 20 | |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principle of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Green New Jersey, Jinong, Gufeng, Tianjuyuan, and the VIE Companies. All significant inter-company accounts and transactions have been eliminated in consolidation.
Effective June 16, 2013, Yuxing was converted from being a wholly-owned foreign enterprise 100% owned by Jinong to a domestic enterprise 100% owned by one natural person, who is not affiliated with the Company (“Yuxing’s Owner”). Effective the same day, Yuxing’s Owner entered into a series of contractual agreements with Jinong pursuant to which Yuxing became the VIE of Jinong.
VIE assessment
A VIE is an entity (1) that has total equity at risk that is not sufficient to finance its activities without additional subordinated financial support from other entities, (2) where the group of equity holders does not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance, or the obligation to absorb the entity’s expected losses or the right to receive the entity’s expected residual returns, or both, or (3) where the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. In order to determine if an entity is considered a VIE, the Company first performs a qualitative analysis, which requires certain subjective decisions regarding its assessments, including, but not limited to, the design of the entity, the variability that the entity was designed to create and pass along to its interest holders, the rights of the parties, and the purpose of the arrangement. If the Company cannot conclude after a qualitative analysis whether an entity is a VIE, it performs a quantitative analysis. The qualitative analysis considered the design of the entity, the risks that cause variability, the purpose for which the entity was created, and the variability that the entity was designed to pass along to its variable interest holders. When the primary beneficiary could not be identified through a qualitative analysis, we used internal cash flow models to compute and allocate expected losses or expected residual returns to each variable interest holder based upon the relative contractual rights and preferences of each interest holder in the VIE’s capital structure.
Use of estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.
Cash and cash equivalents and concentration of cash
For statement of cash flows purposes, the Company considers all cash on hand and in banks, certificates of deposit with state owned banks in the People’s Republic of China (“PRC”) and banks in the United States, and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. The Company maintains large sums of cash in three major banks in China. The aggregate cash in such accounts and on hand as of December 31, 2017 and June 30, 2017 were $145,417,158 and $123,050,548, respectively. The Company had $145,409,838 and $122,907,629 in cash in banks in China, and also had $7,320 and $142,919 in cash in two banks in the United States as of December 31, 2017 and June 30, 2017, respectively. Cash overdrafts as of a balance sheet date will be reflected as liabilities in the balance sheet. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.
Accounts receivable
The Company’s policy is to maintain reserves for potential credit losses on accounts receivable. Management regularly reviews the composition of accounts receivable and analyzes customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves at each year-end. Accounts considered uncollectible are written off through a charge to the valuation allowance. As of December 31, 2017, and June 30, 2017, the Company had accounts receivable of $122,117,190 and $141,665,179, net of allowance for doubtful accounts of $13,949,452 and $9,457,423, respectively.
Inventories
Inventory is valued at the lower of cost (determined on a weighted average basis) or market. Inventories consist of raw materials; work in process, finished goods and packaging materials. The Company reviews its inventories regularly for possible obsolete goods and establishes reserves when determined necessary.
| 1 |
Deferred assets
Deferred assets represent amounts that the distributors owed to the Company in their marketing efforts and developing standard stores to expand the Company’s products’ competitiveness and market shares. The amount owed to the Company to assist its distributors will be expensed over three years, which is the term as stated in the cooperation agreement, as long as the distributors are actively selling the Company’s products. For the six months ended December 31, 2017 and 2016, the Company amortized $864,070 and $9,894,637 respectively, of the deferred assets. If a distributor breaches, defaults, or terminates the agreement with the Company within the three-year period, the outstanding unamortized portion of the amount owed will become payable to the Company immediately.
The deferred assets consist of items inside the distributors’ stores such as furniture, racks, cabinets, and display units, and items outside or attached to the distributors’ stores such as signage and billboards. These types of assets would be capitalized as fixed assets if the Company actually owned the stores or utilized the assets for its own operations. These assets would also be capitalized as leasehold improvements if the Company leased these stores from the distributors. Therefore, the Company believes that under U.S. generally accepted accounting principles, these types of asset purchases are properly capitalized. In addition, the Company believes that these assets are properly classified as deferred assets because if a distributor breaches, defaults, or terminates the agreement with the Company within a three-year period, a proportionate amount expended by the Company is to be repaid by the distributor.
The assets inside the distributors’ stores are custom made to fit the layout of each individual store and the signage and billboards are also custom designed to fit the specific location. The assets were purchased by the Company directly from the manufacturers and installed in the distributors’ stores. The Company wants to maintain control over the quality of the items being purchased as well as making them uniform among all the distributor locations.
Intangible Assets
The Company records intangible assets acquired individually or as part of a group at fair value. Intangible assets with definitive lives are amortized over the useful life of the intangible asset, which is the period over which the asset is expected to contribute directly or indirectly to the entity’s future cash flows. The Company evaluates intangible assets for impairment at least annually and more often whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.
Customer deposits
Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as customer deposits. When all revenue recognition criteria are met, the customer deposits are recognized as revenue. As of December 31, 2017, and June 30, 2017, the Company had customer deposits of $6,935,326 and $7,046,570, respectively.
Earnings per share
Basic earnings per share are computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and stock awards.
The components of basic and diluted earnings per share consist of the following:
| Three Months Ended | ||||||||
| December 31, | ||||||||
| 2017 | 2016 | |||||||
| Net Income for Basic Earnings Per Share | $ | 7,826,107 | $ | 5,506,011 | ||||
| Basic Weighted Average Number of Shares | 38,551,264 | 37,658,062 | ||||||
| Net Income Per Share – Basic | $ | 0.20 | $ | 0.15 | ||||
| Net Income for Diluted Earnings Per Share | $ | 7,826,107 | $ | 5,506,011 | ||||
| Diluted Weighted Average Number of Shares | 38,551,264 | 37,658,062 | ||||||
| Net Income Per Share – Diluted | $ | 0.20 | $ | 0.15 | ||||
| 2 |
| Six Months Ended | ||||||||
| December 31, | ||||||||
| 2017 | 2016 | |||||||
| Net Income for Basic Earnings Per Share | $ | 12,920,935 | $ | 12,857,591 | ||||
| Basic Weighted Average Number of Shares | 38,551,264 | 37,653,333 | ||||||
| Net Income Per Share – Basic | $ | 0.34 | $ | 0.34 | ||||
| Net Income for Diluted Earnings Per Share | $ | 12,920,935 | $ | 12,857,591 | ||||
| Diluted Weighted Average Number of Shares | 38,551,264 | 37,653,333 | ||||||
| Net Income Per Share – Diluted | $ | 0.34 | $ | 0.34 | ||||
Recent accounting pronouncements
In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. This update is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The Company does not anticipate the adoption of this ASU will have a significant impact on its consolidated financial position, results of operations, or cash flows.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in ASU No. 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share Based Payment Accounting, to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance will be effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of this newly issued guidance to its consolidated financial statements.
In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”), which clarifies the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The new guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods, which will be our interim period beginning July 1, 2018. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.
In May 2016, the FASB issued ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-06 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting” (“ASU 2016-11”), which clarifies revenue and expense recognition for freight costs, accounting for shipping and handling fees and costs, and accounting for consideration given by a vendor to a customer. The new guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods, which will be our interim period beginning July 1, 2018. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.
| 3 |
In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), which amends the guidance in the new revenue standard on collectability, noncash consideration, presentation of sales tax, and transition. The amendments are intended to address implementation issues and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. The new guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods, which will be our interim period beginning July 1, 2018. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, regarding ASC Topic 230 “Statement of Cash Flows.” This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. The Company does not expect the adoption of this standard to have a significant effect on our consolidated financial statements.
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): “Restricted Cash”(“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This update is effective in fiscal years, including interim periods, beginning after December 15, 2017 and early adoption is permitted. The adoption of this guidance will result in the inclusion of the restricted cash balances within the overall cash balance and removal of the changes in restricted cash activity, which is currently recognized in Other financing activities, on the Statements of Consolidated Cash Flows. Furthermore, an additional reconciliation will be required to reconcile Cash and cash equivalents and restricted cash reported within the Consolidated Balance Sheets to sum to the total shown in the Statements of Consolidated Cash Flows. The Company anticipates adopting this new guidance effective January 1, 2018. The Company is currently evaluating this guidance and the impact it will have on the Consolidated Financial Statements and disclosures.
In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. This guidance will be effective for us in the first quarter of 2018 on a prospective basis, and early adoption is permitted. We do not expect the standard to have a material impact on our consolidated financial statements.
In May 2017, the FASB issued ASU No. 2017-09, “Compensation—Stock compensation (Topic 718): Scope of modification accounting” (“ASU 2017-09”). The purpose of the amendment is to clarify which changes to the terms or condition of a share-based payment award require an entity to apply modification accounting. For all entities that offer share based payment awards, ASU 2017-09 is effective for interim and annual reporting periods beginning after December 15, 2017. The Company is currently assessing the impact of ASU 2017-09 on its condensed consolidated financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or was not believed by management to have a material impact on the Company’s present or future financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes to those financial statements appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve significant risks and uncertainties. As a result of many factors, such as the slow-down of the global financial markets and its impact on economic growth in general, the competition in the fertilizer industry and the impact of such competition on pricing, revenues and margins, the weather conditions in the areas where our customers are based, the cost of attracting and retaining highly skilled personnel, the prospects for future acquisitions, and the factors set forth elsewhere in this report, our actual results may differ materially from those anticipated in these forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this report will in fact occur. You should not place undue reliance on the forward-looking statements contained in this report.
The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by U.S. federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Further, the information about our intentions contained in this report is a statement of our intention as of the date of this report and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, and our assumptions as of such date. We may change our intentions, at any time and without notice, based upon any changes in such factors, in our assumptions or otherwise.
Unless the context indicates otherwise, as used in the notes to the financial statements of the Company, the following are the references herein of all the subsidiaries of the Company (i) Green Agriculture Holding Corporation (“Green New Jersey”), a wholly-owned subsidiary of Green Nevada incorporated in the State of New Jersey; (ii) Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. (“Jinong”), a wholly-owned subsidiary of Green New Jersey organized under the laws of the PRC; (iii) Xi’an Hu County Yuxing Agriculture Technology Development Co., Ltd. (“Yuxing”), a Variable Interest Entity in the PRC (“VIE”) controlled by Jinong through contractual agreements; (iv) Shaanxi Lishijie Agrochemical Co., Ltd. (“Lishijie”), a VIE controlled by Jinong through contractual agreements; (v) Songyuan Jinyangguang Sannong Service Co., Ltd. (“Jinyangguang”), a VIE in the PRC controlled by Jinong through contractual agreements; (vi) Weinan City Linwei District Wangtian Agricultural Materials Co., Ltd. (“Wangtian”), a VIE controlled by Jinong through contractual agreements; (vii) Aksu Xindeguo Agricultural Materials Co., Ltd. (“Xindeguo”), a VIE controlled by Jinong through contractual agreements; (vii) Xinjiang Xinyulei Eco-agriculture Science and Technology Co., Ltd (“Xinyulei”), a VIE controlled by Jinong through contractual agreements; (ix) Sunwu County Xiangrong Agricultural Materials Co., Ltd. (“Xiangrong”), a VIE controlled by Jinong through contractual agreements; (x) Anhui Fengnong Seed Co., Ltd. (“Fengnong”), a VIE controlled by Jinong through contractual agreements; (xi) Beijing Gufeng Chemical Products Co., Ltd., a wholly-owned subsidiary of Jinong in the PRC (“Gufeng”); and (xii) Beijing Tianjuyuan Fertilizer Co., Ltd., Gufeng’s wholly-owned subsidiary in the PRC (“Tianjuyuan”). Yuxing, Lishijie, Jinyangguang, Wangtian, Xindeguo, Xinyulei, Xiangrong and Fengnong may also collectively be referred to as the “the VIE Companies”; Lishijie, Jinyangguang, Wangtian, Xindeguo, Xinyulei, Xiangrong and Fengnong may also collectively be referred to as “the sales VIEs” or “the sales VIE companies”.
Unless the context otherwise requires, all references to (i) “PRC” and “China” are to the People’s Republic of China; (ii) “U.S. dollar,” “$” and “US$” are to United States dollars; and (iii) “RMB”, “Yuan” and Renminbi are to the currency of the PRC or China.
| 5 |
Overview
We are engaged in research, development, production and sale of various types of fertilizers and agricultural products in the PRC through our wholly-owned Chinese subsidiaries, Jinong, Gufeng (including Gufeng’s subsidiary Tianjuyuan), Yuxing and our VIE. Our primary business is fertilizer products, specifically humic-acid based compound fertilizer produced by Jinong and compound fertilizer, blended fertilizer, organic compound fertilizer, slow-release fertilizer, highly-concentrated water-soluble fertilizer and mixed organic-inorganic compound fertilizer produced by Gufeng. In addition, through Yuxing, we develop and produce various agricultural products, such as top-grade fruits, vegetables, flowers and colored seedlings. For financial reporting purposes, our operations are organized into three business segments: fertilizer products (Jinong), fertilizer products (Gufeng) and agricultural products production (Yuxing).
The fertilizer business conducted by Jinong and Gufeng generated approximately 75.5% and 78.9% of our total revenues for the six months ended December 31, 2017 and 2016, respectively. The sales VIEs generated 21.6% and 18.0% of our revenues for the six months ended December 31, 2017 and 2016, respectively. Yuxing serves as a research and development base for our fertilizer products.
Fertilizer Products
As of December 31, 2017, we had developed and produced a total of 720 different fertilizer products in use, of which 136 were developed and produced by Jinong, 333 by Gufeng, and 251 by the VIE Companies.
Below is a table that shows the metric tons of fertilizer sold by Jinong and Gufeng and the revenue per ton for the periods indicated:
| Three Months Ended | Change | |||||||||||||||
| December 31, | 2016 to 2017 | |||||||||||||||
| 2017 | 2016 | Amount | % | |||||||||||||
| (metric tons) | ||||||||||||||||
| Jinong | 13,165 | 8,955 | 4,210 | 47.0 | % | |||||||||||
| Gufeng | 66,237 | 63,167 | 3,070 | 4.9 | % | |||||||||||
| 79,402 | 72,122 | 13,922 | ||||||||||||||
| Three Months Ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| (revenue per tons) | ||||||||
| Jinong | $ | 2,107 | $ | 2,996 | ||||
| Gufeng | 364 | 334 | ||||||
| Six Months Ended | Change | |||||||||||||||
| December 31, | 2016 to 2017 | |||||||||||||||
| 2017 | 2016 | Amount | % | |||||||||||||
| (metric tons) | ||||||||||||||||
| Jinong | 27,690 | 18,635 | 9,055 | 48.6 | % | |||||||||||
| Gufeng | 129,404 | 108,698 | 20,706 | 19.0 | % | |||||||||||
| 157,094 | 127,333 | 29,761 | ||||||||||||||
| 6 |
| Six Months Ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| (revenue per tons) | ||||||||
| Jinong | $ | 2,045 | $ | 3,126 | ||||
| Gufeng | 352 | 339 | ||||||
For the three months ended December 31, 2017, we sold approximately 79,042 metric tons of fertilizer products, as compared to 72,122 metric tons for the three months ended December 31, 2016. For the three months ended December 31, 2017, Jinong sold approximately 13,165 metric tons of fertilizer products, as compared to 8,955 metric tons for the three months ended December 31, 2016. For the three months ended December 31, 2017, Gufeng sold approximately 66,237 metric tons of fertilizer products, as compared to 63,167 metric tons for the three months ended December 31, 2016.
For the six months ended December 31, 2017, we sold approximately 157,094 metric tons of fertilizer products, as compared to 127,333 metric tons for the six months ended December 31, 2016. For the six months ended December 31, 2017, Jinong sold approximately 27,690 metric tons of fertilizer products, an increase of 9,055 metric tons, or 48.6%, as compared to 18,635 metric tons for the six months ended December 31, 2016. For the six months ended December 31, 2017, Gufeng sold approximately 129,404 metric tons of fertilizer products, an increase of 20,706 metric tons, or 19.0% as compared to 108,698 metric tons for the six months ended December 31, 2016.
Our sales of fertilizer products to customers in five provinces within China accounted for approximately 55.5% of our fertilizer revenue for the three months ended December 31, 2017. Specifically, the provinces and their respective percentage contributing to our fertilizer revenues were: Hebei (23.4%), Heilongjiang (9.0%), Inner Mongolia (7.8%), Liaoning (7.7%), and Shaanxi (7.5%).
As of December 31, 2017, we had a total of 1,939 distributors covering 22 provinces, 4 autonomous regions and 4 central government-controlled municipalities in China. Jinong had 1,127 distributors in China. Jinong’s sales are not dependent on any single distributor or any group of distributors. Jinong’s top five distributors accounted for 2.03% of its fertilizer revenues for the three months ended December 31, 2017. Gufeng had 314 distributors, including some large state-owned enterprises. Gufeng’s top five distributors accounted for 74.6% of its revenues for the three months ended December 31, 2017.
Agricultural Products
Through Yuxing, we develop, produce and sell high-quality flowers, green vegetables and fruits to local marketplaces and various horticulture and planting companies. We also use certain of Yuxing’s greenhouse facilities to conduct research and development activities for our fertilizer products. The three PRC provinces and municipalities that accounted for 80.9% of our agricultural products revenue for the three months ended December 31, 2017 were Shaanxi (60.1%), Sichuan (10.4%), and Zhejiang (7.5%).
Recent Developments
New Products and distributors
During the three months ended December 31, 2017, Jinong did not launch any new fertilizer product. However, Jinong added 6 new distributors during this period. Gufeng did not launch any new fertilizer products, but added two new distributors during the three months ended December 31, 2017
Strategic Acquisitions
On June 30, 2016 and January 1, 2017, through Jinong, we entered into (i) Strategic Acquisition Agreements (the “SAA”), and (ii) Agreements for Convertible Notes (the “ACN”), with the shareholders of the companies as identified below (the “Targets”).
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June 30, 2016:
| Cash | Principal of | |||||||||
| Payment for | Notes for | |||||||||
| Acquisition | Acquisition | |||||||||
| Company Name | Business Scope | (RMB[1]) | (RMB) | |||||||
| Shaanxi Lishijie Agrochemical Co., Ltd. | Sales of pesticides, agricultural chemicals, chemical fertilizers, agricultural materials; Manufacture and sales of mulches. | 10,000,000 | 3,000,000 | |||||||
| Songyuan Jinyangguang Sannong Service Co., Ltd. | Promotion and consulting services regarding agricultural technologies; Retail sales of chemical fertilizers (including compound fertilizers and organic fertilizers); Wholesale and retail sales of pesticides, agricultural machinery and accessories; Collection of agricultural information; Development of saline-alkali soil; Promotion and development of high-efficiency agriculture and related information technology solutions for agriculture, agricultural and biological engineering high technologies; E-commerce; Cultivation of freshwater fish, poultry, fruits, flowers, vegetables, and seeds; Recycling and complex utilization of straw and stalk; Technology transfer and training; Recycling of agricultural materials ; Ecological industry planning. | 8,000,000 | 12,000,000 | |||||||
| Shenqiu County Zhenbai Agriculture Co., Ltd. [2] | Cultivation of crops; Storage, sales, preliminary processing and logistics distribution of agricultural by-products; Promotion and application of agricultural technologies; Purchase and sales of agricultural materials; Electronic commerce. | 3,000,000 | 12,000,000 | |||||||
| Weinan City Linwei District Wangtian Agricultural Materials Co., Ltd. | Promotion and application of new agricultural technologies; Professional prevention of plant diseases and insect pests; Sales of plant protection products, plastic mulches, material, chemical fertilizers, pesticides, agricultural medicines, micronutrient fertilizers, hormones, agricultural machinery and medicines, and gardening tools. | 6,000,000 | 12,000,000 | |||||||
| Aksu Xindeguo Agricultural Materials Co., Ltd. | Wholesale and retail sales of pesticides; Sales of chemical fertilizers, packaged seeds, agricultural mulches, micronutrient fertilizers, compound fertilizers, plant growth regulators, agricultural machineries, and water economizers; Consulting services for agricultural technologies; Purchase and sales of agricultural by- products. | 10,000,000 | 12,000,000 | |||||||
| Xinjiang Xinyulei Eco-agriculture Science and Technology Co., Ltd | Sales of chemical fertilizers, packaged seeds, agricultural mulches, micronutrient fertilizers, organic fertilizers, plant growth regulators, agricultural machineries, and water economizers; Purchase and sales of agricultural by-products; Cultivation of fruits and vegetables; Consulting services and training for agricultural technologies; Storage services; Sales of articles of daily use, food and oil; On-line sales of the above-mentioned products. | |||||||||
| Total | 37,000,000 | 51,000,000 | ||||||||
| (1) | The exchange rate between RMB and U.S. dollars on June 30, 2016 is RMB1=US$0.1508, according to the exchange rate published by Bank of China. | |
| (2) | On November 30, 2017, the Company, through its wholly-owned subsidiary Jinong, discontinued the strategic acquisition agreements and the series of contractual agreements with the shareholders of Zhenbai. In return, the shareholders of Zhenbai agreed to tender the whole payment consideration in the SAA back to the Company with early termination penalties. The convertible notes paid to Zhenbai’s shareholders and the accrued interest has been forfeited. |
| 8 |
January 1, 2017:
| Cash | Principal of | |||||||||
| Payment for | Notes for | |||||||||
| Acquisition | Acquisition | |||||||||
| Company Name | Business Scope | (RMB[1]) | (RMB) | |||||||
| Sunwu County Xiangrong Agricultural Materials Co., Ltd. | Sales of pesticides, agricultural chemicals, chemical fertilizers, agricultural materials; Manufacture and sales of mulches. | 4,000,000 | 6,000,000 | |||||||
| Anhui Fengnong Seed Co., Ltd. | Wholesale and retail sales of pesticides; Sales of chemical fertilizers, packaged seeds, agricultural mulches, micronutrient fertilizers, compound fertilizers and plant growth regulators | 4,000,000 | 6,000,000 | |||||||
| Total | 8,000,000 | 12,000,000 | ||||||||
(2) The exchange rate between RMB and U.S. dollars on January 1, 2017 is RMB1=US$0.144, according to the exchange rate published by Bank of China.
Pursuant to the SAA and the ACN, the shareholders of the Targets, while retaining possession of the equity interests and continuing to be the legal owners of such interests, agreed to pledge and entrust all of their equity interests, including the proceeds thereof but excluding any claims or encumbrances, and the operations and management of its business to Jinong, in exchange of an aggregate amount of RMB45,000,000 (approximately $6,731,600) to be paid by Jinong within three days following the execution of the SAA, ACN and the VIE Agreements, and convertible notes with an aggregate face value of RMB 63,000,000 (approximately $9,418,800) with an annual fixed compound interest rate of 3% and term of three years.
Jinong acquired the Targets using the VIE arrangement based on our need to further develop our business and comply with the regulatory requirements under the PRC laws.
As our business focuses on the production of fertilizer, all our business activities intertwine with those in the agriculture industry in China. Specifically, we deal with compliance, regulation, safety, inspection, and licenses in fertilizer production, farm land use and transfer, growing and distribution of agriculture goods, agriculture basic supplies, seeds, pesticides, and trades of grains. It is an industry in which heavy regulations get implemented and strictly enforced. In addition, E-commerce, which is also under strict government regulation in the PRC, has lately become a sales and distribution channel for agricultural products. Currently, we are developing an online platform to connect the physical distribution network we either own or lease.
Compared with the regulatory environment in other jurisdictions, the regulatory environment in the PRC is unique. For example, the “M&A Rules” purports to require that an offshore special purpose vehicle controlled directly or indirectly by PRC companies or individuals and formed for purposes of overseas listing through acquisition of PRC domestic interests held by such PRC companies or individuals obtain the approval of the China Securities Regulatory Commission (the “CSRC”) prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published procedures regarding its approval of overseas listings by special purpose vehicles.
For both e-commerce and agriculture industries, PRC regulators limit the investment from foreign entities and set particularly rules for foreign-owned entities to conduct business. We expect these limitations on foreign-owned entities will continue to exist in e-commerce and agriculture industries. The VIE arrangement, however, provides feasibility for obtaining administrative approval process and avoiding industry restrictions that can be imposed on an entity that is a wholly-owned subsidiary of a foreign entity. The VIE agreements reduce uncertainty and the current limitation risk. It is our understanding that the VIE agreements, as well as the control we obtained through VIE arrangement, are valid and enforceable. Such legal structure does not violate the known, published, and current PRC laws. While there are substantial uncertainties regarding the interpretation and application of PRC Laws and future PRC laws and regulations, and there can be no assurance that the PRC authorities will take a view that is not contrary to or otherwise different from our belief and understanding stated above, we believe the substantial difficulty that we experienced previously to conduct business in agriculture as a foreign ownership ca be greatly reduced by the VIE arrangement. Further, as an integral part of the VIE arrangement, the underlying equity pledge agreements provide legal protection for the control we obtained. Pursuant to the equity pledge agreements, we have completed the equity pledge processes with the Targets to ensure the complete control of the interests in the Targets. The shareholders of the Targets are not entitled to transfer any shares to a third party under the exclusive option agreements. If necessary, they may transfer shares to our company without consideration.
While the VIE arrangement provides us with the feasibility to conduct our business in the E-Commerce and agriculture industries, validity and enforceability of VIE arrangement is subject to (i) any applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws affecting creditors’ rights generally, (ii) possible judicial or administrative actions or any PRC Laws affecting creditors’ rights, (iii) certain equitable, legal or statutory principles affecting the validity and enforceability of contractual rights generally under concepts of public interest, interests of the State, national security, reasonableness, good faith and fair dealing, and applicable statutes of limitation; (iv) any circumstance in connection with formulation, execution or implementation of any legal documents that would be deemed materially mistaken, clearly unconscionable, fraudulent, coercive at the conclusions thereof; and (v) judicial discretion with respect to the availability of indemnifications, remedies or defenses, the calculation of damages, the entitlement to attorney’s fees and other costs, and the waiver of immunity from jurisdiction of any court or from legal process. Validity and enforceability of VIE arrangement is also subject to risk derived from the discretion of any competent PRC legislative, administrative or judicial bodies in exercising their authority in the PRC. As a result, there can no assurance that any of such PRC Laws will not be changed, amended or replaced in the immediate future or in the longer term with or without retrospective effect.
| 9 |
Results of Operations
Three Months ended December 31, 2017 Compared to the Three Months ended December 31, 2016.
| 2017 | 2016 | Change $ | Change % | |||||||||||||
| Sales | ||||||||||||||||
| Jinong | 26,211,280 | 26,825,674 | (614,394 | ) | -2.3 | % | ||||||||||
| Gufeng | 24,447,721 | 21,066,559 | 3,381,162 | 16.0 | % | |||||||||||
| Yuxing | 1,953,748 | 2,454,314 | (500,566 | ) | -20.4 | % | ||||||||||
| Sales VIEs | 11,350,893 | 8,398,466 | 2,952,427 | 35.2 | % | |||||||||||
| Net sales | 63,963,642 | 58,745,013 | 5,218,629 | 8.9 | % | |||||||||||
| Cost of goods sold | ||||||||||||||||
| Jinong | 13,265,827 | 12,332,360 | 933,467 | 7.6 | % | |||||||||||
| Gufeng | 21,160,024 | 18,138,659 | 3,021,365 | 16.7 | % | |||||||||||
| Yuxing | 1,536,238 | 1,934,046 | (397,808 | ) | -20.6 | % | ||||||||||
| Sales VIEs | 9,452,987 | 7,159,707 | 2,293,280 | 32.0 | % | |||||||||||
| Cost of goods sold | 45,415,076 | 39,564,772 | 5,850,304 | 14.8 | % | |||||||||||
| Gross profit | 18,548,566 | 19,180,241 | (631,675 | ) | -3.3 | % | ||||||||||
| Operating expenses | ||||||||||||||||
| Selling expenses | 7,682,008 | 3,965,382 | 3,716,626 | 93.7 | % | |||||||||||
| Selling expenses - amortization of deferred asset | 0 | 3,475,438 | (3,475,438 | ) | -100.0 | % | ||||||||||
| General and administrative expenses | 937,359 | 4,633,905 | (3,696,546 | ) | -79.8 | % | ||||||||||
| Total operating expenses | 8,619,367 | 12,074,725 | (3,455,358 | ) | -28.6 | % | ||||||||||
| Income from operations | 9,929,199 | 7,105,516 | 2,823,683 | 39.7 | % | |||||||||||
| Other income (expense) | ||||||||||||||||
| Other income (expense) | (669,760 | ) | (114,115 | ) | (555,645 | ) | 486.9 | % | ||||||||
| Interest income | 130,248 | 76,494 | 53,754 | 70.3 | % | |||||||||||
| Interest expense | (94,587 | ) | (93,246 | ) | (1,341 | ) | 1.4 | % | ||||||||
| Total other income (expense) | (634,099 | ) | (130,867 | ) | (503,232 | ) | 384.5 | % | ||||||||
| Income before income taxes | 9,295,101 | 6,974,649 | 2,320,452 | 33.3 | % | |||||||||||
| Provision for income taxes | 1,521,646 | 1,468,638 | 53,008 | 3.6 | % | |||||||||||
| Net income | 7,773,455 | 5,506,011 | 2,267,444 | 41.2 | % | |||||||||||
| Other comprehensive income (loss) | ||||||||||||||||
| Foreign currency translation gain (loss) | 8,255,781 | (1,205,884 | ) | 9,461,665 | -784.6 | % | ||||||||||
| Comprehensive income (loss) | 16,029,236 | 4,300,127 | 11,729,109 | 272.8 | % | |||||||||||
| Basic weighted average shares outstanding | 365,987 | 37,658,062 | (37,292,075 | ) | -99.0 | % | ||||||||||
| Basic net earnings per share | 0.20 | 0.15 | (0.07 | ) | 37.0 | % | ||||||||||
| Diluted weighted average shares outstanding | 365,987 | 37,658,062 | (37,292,075 | ) | -99.0 | % | ||||||||||
| Diluted net earnings per share | 0.20 | 0.15 | (0.07 | ) | 37.0 | % | ||||||||||
| 10 |
Net Sales
Total net sales for the three months ended December 31, 2017 were $63,963,642, an increase of $5,218,629 or 8.9%, from $58,745,013 for the three months ended December 31, 2016. This increase was primarily due to an increase in sales VIE’s and Gufeng’s net sales.
For the three months ended December 31, 2017, Jinong’s net sales decreased $614,394, or 2.3%, to $26,211,280 from $26,825,674 for the three months ended December 31, 2016. This decrease was mainly attributable to the decrease in Jinong’s sales volume in the last three months.
For the three months ended December 31, 2017, Gufeng’s net sales were $24,447,721, an increase of $3,381,162, or 16.0% from $21,066,559 for the three months ended December 31, 2016. This increase was mainly attributable to the increase in market demand during the last three months.
For the three months ended December 31, 2017, Yuxing’s net sales were $1,953,748, a decrease of $500,566 or 20.4%, from $2,454,314 for the three months ended December 31, 2016. The decrease was mainly due to the decrease in market demand during the last three months.
For the three months ended December 31, 2017, VIEs’ net sales were $11,350,893, an increase of $2,952,427 or 35.2%, from $8,398,466 for the three months ended December 31, 2016. The increase was mainly attributable to the increase in market demand during the last three months.
Cost of Goods Sold
Total cost of goods sold for the three months ended December 31, 2017 was $45,415,076, an increase of $5,850,304, or 14.8%, from $39,564,772 for the three months ended December 31, 2016. The increase was mainly due to the increase in sales VIE’s and Gufeng’s cost of goods sold which increased 32.0% and 16.7% respectively.
Cost of goods sold by Jinong for the three months ended December 31, 2017 was $13,265,827, a decrease of $933,467, or 7.6%, from $12,332,360 for the three months ended December 31, 2016. The decrease in cost of goods was primarily attributable to the 2.3% decrease in net sale during the last three months.
Cost of goods sold by Gufeng for the three months ended December 31, 2017 was $21,160,024, an increase of $3,021,365, or 16.7%, from $18,138,659 for the three months ended December 31, 2016. This increase was primarily attributable to the more products sold during the last three months.
For three months ended December 31, 2017, cost of goods sold by Yuxing was $1,536,238, a decrease of $397,808 or 20.6%, from $1,934,046 for the three months ended December 31, 2016. The decrease in cost of goods was primarily attributable to the 20.4% decrease in net sale during the last three months.
Cost of goods sold by VIEs for the three months ended December 31, 2017 was $9,452,987, an increase of $2,293,280, or 32.0%, from $7,159,707 for the three months ended December 31, 2016. This increase was primarily attributable to the more products sold during the last three months.
Gross Profit
Total gross profit for the three months ended December 31, 2017 decreased by $631,675, or 3.3%, to $18,548,566, as compared to $19,180,241 for the three months ended December 31, 2016. Gross profit margin was 29.0% and 32.6% for the three months ended December 31, 2017 and 2016, respectively.
Gross profit generated by Jinong decreased by $1,547,861, or 10.7%, to $12,945,453 for the three months ended December 31, 2017 from $14,493,314 for the three months ended December 31, 2016. Gross profit margin from Jinong’s sales was approximately 49.4% and 54.0% for the three months ended December 31, 2017 and 2016, respectively. The decrease in gross profit margin was mainly due to higher raw material cost and higher packaging cost.
For the three months ended December 31, 2017, gross profit generated by Gufeng was $3,287,697, an increase of $359,797, or 12.3%, from $2,927,900 for the three months ended December 31, 2016. Gross profit margin from Gufeng’s sales was approximately 13.4% and 13.9% for the three months ended December 31, 2017 and 2016, respectively. The decrease in gross profit percentage was mainly due to the increase in product costs and the decrease in sales prices.
For the three months ended December 31, 2017, gross profit generated by Yuxing was $417,510, a decrease of $102,758, or 19.8% from $520,268 for the three months ended December 31, 2016. The gross profit margin was approximately 21.4% and 21.2% for the three months ended December 31, 2017 and 2016, respectively, which is slightly increased.
Gross profit generated by VIEs increased by $659,147, or 53.2%, to $1,897,906 for the three months ended December 31, 2017 from $ 1,234,759 for the three months ended December 31, 2016. Gross profit margin from VIE’s sales was approximately 16.7% and 14.7% for the three months ended December 31, 2017 and 2016, respectively.
| 11 |
Selling Expenses
Our selling expenses consisted primarily of salaries of sales personnel, advertising and promotion expenses, freight-out costs and related compensation. Selling expenses were $7,682,008, or 12.0%, of net sales for the three months ended December 31, 2017, as compared to $3,965,382, or 6.8% of net sales for the three months ended December 31, 2016, an increase of $3,716,626, or 93.7%.
The selling expenses of Jinong for the three months ended December 31, 2017 were $7,172,773 or 27.4% of Jinong’s net sales, as compared to selling expenses of $3,637,790 or 13.6% of Jinong’s net sales for the three months ended December 31, 2016. The increase in Jinong’s selling expenses was due to Jinong’s expanded marketing efforts. The selling expenses of Yuxing were $10,498 or 0.5% of Yuxing’s net sales for the three months ended December 31, 2017, as compared to $11,264 or 0.5% of Yuxing’s net sales for the three months ended December 31, 2016. The selling expenses of Gufeng were $ 189,945 or 0.1% of Gufeng’s net sales for the three months ended December 31, 2017, as compared to $68,080 or 0.3% of Gufeng’s net sales for the three months ended December 31, 2016. The selling expenses of VIEs were $319,290 or 2.4% of VIEs’ net sales for the three months ended December 31, 2017, as compared to $248,248, or 3.0% of VIEs’ net sales for the three months ended December 31, 2016.
Selling Expenses – amortization of deferred assets
Our selling expenses - amortization of our deferred assets were 0 for the three months ended December 31, 2017, as compared to $3,475,438, or 5.9% of net sales for the three months ended December 31, 2016. This decrease was due to the fact that all deferred assets were fully amortized and therefore no amortization was recorded on the fully amortized assets during the three months ended December 31, 2017.
General and Administrative Expenses
General and administrative expenses consisted primarily of related salaries, rental expenses, business development, depreciation and travel expenses incurred by our general and administrative departments and legal and professional expenses including expenses incurred and accrued for certain litigation. General and administrative expenses were $937,359, or 1.5% of net sales for the three months ended December 31, 2017, as compared to $ 4,633,905, or 12.1%, of net sales for the three months ended December 31, 2016, a decrease of $ 3,696,546, or 79.8%.
Total Other Expenses
Total other expenses consisted of income from subsidies received from the PRC government, interest income, interest expenses and bank charges. Total other expense for the three months ended December 31, 2017 was $572,155, as compared to $130,867 for the three months ended December 31, 2016, an increase in expense of $441,288, or 337.2%. The increase in total other expense was largely resulted from the increase for bank charges and accretion expenses offset by the decrease in interest expenses.
Income Taxes
Jinong is subject to a preferred tax rate of 15% as a result of its business being classified as a High-Tech project under the PRC Enterprise Income Tax Law (“EIT”) that became effective on January 1, 2008. Jinong incurred income tax expenses of $1,836,635 for the three months ended December 31, 2017, as compared to $891,953 for the three months ended December 31, 2016, an increase of $ 944,682, or 105.9%.
Gufeng is subject to a tax rate of 25%, incurred income tax expenses of $ 1,159,097 for the three months ended December 31, 2017, as compared to $484,768 for the three months ended December 31, 2016, an increase of $ 674,329, or 139.1%, which was primarily due to Gufeng’s increased net income.
Yuxing has no income tax for the three months ended December 31, 2017 and 2016 as a result of being exempted from paying income tax due to its products falling into the tax exemption list set out in the EIT.
Net Income
Net income for the three months ended December 31, 2017 was $7,773,455, an increase of $2,267,444, or 41.2%, compared to $5,506,011 for the three months ended December 31, 2016. Net income as a percentage of total net sales was approximately 12.2% and 9.4% for the three months ended December 31, 2017 and 2016, respectively.
| 12 |
Six Months ended December 31, 2017 Compared to the Six Months ended December 31, 2016.
| 2017 | 2016 | Change $ | Change % | |||||||||||||
| Sales | ||||||||||||||||
| Jinong | 52,985,040 | 58,253,394 | (5,268,354 | ) | -9.0 | % | ||||||||||
| Gufeng | 42,669,787 | 36,876,073 | 5,793,714 | 15.7 | % | |||||||||||
| Yuxing | 3,746,391 | 3,809,725 | (63,334 | ) | -1.7 | % | ||||||||||
| Sales VIEs | 27,330,927 | 21,690,443 | 5,640,484 | 26.0 | % | |||||||||||
| Net sales | 126,732,145 | 120,629,635 | 6,102,510 | 5.1 | % | |||||||||||
| Cost of goods sold | ||||||||||||||||
| Jinong | 26,378,583 | 25,601,590 | 776,993 | 3.0 | % | |||||||||||
| Gufeng | 37,146,453 | 31,523,736 | 5,622,717 | 17.8 | % | |||||||||||
| Yuxing | 2,928,791 | 2,979,654 | (50,863 | ) | -1.7 | % | ||||||||||
| Sales VIEs | 22,661,751 | 17,913,386 | 4,748,365 | 26.5 | % | |||||||||||
| Cost of goods sold | 89,115,578 | 78,018,366 | 11,097,212 | 14.2 | % | |||||||||||
| Gross profit | 37,616,567 | 42,611,269 | (4,994,702 | ) | -11.7 | % | ||||||||||
| Operating expenses | ||||||||||||||||
| Selling expenses | 12,861,012 | 8,977,450 | 3,883,562 | 43.3 | % | |||||||||||
| Selling expenses - amortization of deferred asset | 9,584,220 | (9,584,220 | ) | -100.0 | % | |||||||||||
| General and administrative expenses | 7,909,981 | 7,865,392 | 44,589 | 0.6 | % | |||||||||||
| Total operating expenses | 20,770,993 | 26,427,062 | (5,656,069 | ) | -21.4 | % | ||||||||||
| Income from operations | 16,845,574 | 16,184,207 | 661,367 | 4.1 | % | |||||||||||
| Other income (expense) | ||||||||||||||||
| Other income (expense) | (676,991 | ) | (155,172 | ) | (521,819 | ) | 336.3 | % | ||||||||
| Interest income | 218,162 | 153,116 | 65,046 | 42.5 | % | |||||||||||
| Interest expense | (274,162 | ) | (231,791 | ) | (42,371 | ) | 18.3 | % | ||||||||
| Total other income (expense) | (732,991 | ) | (233,847 | ) | (499,144 | ) | 213.4 | % | ||||||||
| Income before income taxes | 16,112,584 | 15,950,360 | 162,224 | 1.0 | % | |||||||||||
| Provision for income taxes | 3,244,301 | 3,092,769 | 151,532 | 4.9 | % | |||||||||||
| Net income | 12,868,283 | 12,857,591 | 10,692 | 0.1 | % | |||||||||||
| Other comprehensive income (loss) | ||||||||||||||||
| Foreign currency translation gain (loss) | 8,495,999 | (16,447,063 | ) | 24,943,062 | -151.7 | % | ||||||||||
| Comprehensive income (loss) | 21,364,282 | (3,589,472 | ) | 24,953,754 | -695.2 | % | ||||||||||
| Basic weighted average shares outstanding | 38,551,264 | 37,653,333 | 897,931 | 2.4 | % | |||||||||||
| Basic net earnings per share | 0.33 | 0.34 | (0.01 | ) | -2.2 | % | ||||||||||
| Diluted weighted average shares outstanding | 38,551,264 | 37,653,333 | 897,931 | 2.4 | % | |||||||||||
| Diluted net earnings per share | 0.33 | 0.34 | (0.01 | ) | -2.2 | % | ||||||||||
Net Sales
Total net sales for the six months ended December 31, 2017 were $126,732,145, an increase of $6,102,510, or 5.1%, from $120,629,635 for the six months ended December 31, 2016.
This increase was largely due to the increase of VIEs’ net sales during the six months ended December 31, 2017. The VIEs’ net sales for the six months ended December 31, 2017 were $27,330,927, an increase of $5,640,484, or 26.0% from the same period a year ago.
| 13 |
For the six months ended December 31, 2017, Jinong’s net sales decreased by $5,268,354, or 9.0%, to $52,985,040 from $58,253,394 for the six months ended December 31, 2016. This decrease was mainly attributable to the decrease in Jinong’s sales volume, which was result of Jinong’s implementation of its new sales strategy that further focuses on producing high-margin liquid fertilizer during the last six months.
For the six months ended December 31, 2017, Gufeng’s net sales were $42,669,787, an increase of $5,793,714 or 15.7% from $36,876,073 for the six months ended December 31, 2016. This increase was mainly attributable to the increase in Gufeng’s sales volume, which was result of the increase in market demand during the six months ended December 31, 2017.
For the six months ended December 31, 2017, Yuxing’s net sales were $3,746,391, a slight decrease of $63,334 or 1.7%, from $3,809,725 during the six months ended December 31, 2016. The decrease was mainly attributable to the decrease in market demand.
For the six months ended December 31, 2017, VIEs’ net sales were $ 27,330,927, an increase of $ 5,640,484 or 26.0% from $ 21,690,443 for the six months ended December 31, 2016. This increase was mainly attributable to the increase in VIEs’ sales volume, which was result of the increase in market demand during the six months ended December 31, 2017.
Cost of Goods Sold
Total cost of goods sold for the six months ended December 31, 2017 was $89,115,578, an increase of $11,097,212, or 14.2%, from $78,018,366 for the six months ended December 31, 2016. This increase was mainly due to the increase for Jinong and VIE’s cost of goods sold.
Cost of goods sold by Jinong for the six months ended December 31, 2017 was $26,378,583, an increase of $776,993, or 3.0%, from $25,601,590 for the six months ended December 31, 2016. The increase was primarily due to the higher labor cost.
Cost of goods sold by Gufeng for the six months ended December 31, 2017 was $37,146,453 an increase of $5,622,717, or 17.8%, from $31,523,736 for the six months ended December 31, 2016. This increase was primarily attributable to the increase in net sales during the last six months.
For the six months ended December 31, 2017, cost of goods sold by Yuxing was $2,928,791, a slight decrease of $50,863, or 1.7%, from $2,979,654 for the six months ended December 31, 2016. This decrease was mainly due to the decrease in Yuxing’s net sales.
Cost of goods sold by VIEs for the six months ended December 31, 2017 was $22,661,751 an increase of $4,748,365, or 26.5%, from $ 17,913,386 for the six months ended December 31, 2016. This increase was primarily attributable to the increase in net sales during the last six months.
Gross Profit
Total gross profit for the six months ended December 31, 2017 decreased by $4,994,702 to $37,616,567, as compared to $42,611,269 for the six months ended December 31, 2016. Gross profit margin was 29.7% and 35.3% for the six months ended December 31, 2017 and 2016, respectively.
Gross profit generated by Jinong decreased by $ 6,045,347, or 18.5%, to $26,606,457 for the six months ended December 31, 2017 from $32,651,804 for the six months ended December 31, 2016. Gross profit margin from Jinong’s sales was approximately 50.2% and 56.1% for the six months ended December 31, 2017 and 2016, respectively. The decrease in gross profit margin was mainly due to higher raw material cost and higher packaging cost.
For the six months ended December 31, 2017, gross profit generated by Gufeng was $5,523,334, an increase of $170,997, or 3.2%, from $5,352,337 for the six months ended December 31, 2016. Gross profit margin from Gufeng’s sales was approximately 12.9% and 14.5% for the six months ended December 31, 2017 and 2016, respectively. The decrease in gross profit percentage was mainly due to the increased weight for lower-margin products sales in Gufeng’s total sales answering to market demand.
| 14 |
For the six months ended December 31, 2017, gross profit generated by Yuxing was $817,600, a slight decrease of $12,471, or 1.5% from $830,071 for the six months ended December 31, 2016. The gross profit margin was approximately 21.8% and 21.8% for the six months ended December 31, 2017 and 2016, respectively.
For the six months ended December 31, 2017, gross profits generated by VIEs were $4,669,176, an increase of $892,119, or 23.6%, from $3,777,057 for the six months ended December 31, 2016. Gross profit margin from VIEs’ sales was approximately 17.1% and 17.4% for the six months ended December 31, 2017 and 2016, respectively. The slight decrease in gross profit percentage was mainly due to higher raw material cost.
Selling Expenses
Our selling expenses consisted primarily of salaries of sales personnel, advertising and promotion expenses, freight-out costs and related compensation. Selling expenses were $12,861,012, or 10.1%, of net sales for the six months ended December 31, 2017, as compared to $8,977,450or 7.4% of net sales for the six months ended December 31, 2016, an increase of $3,883,562, or 43.3%. This increase was primarily due to Jinong. The selling expenses of Jinong for the six months ended December 31, 2017 were $12,015,951 or 22.7% of Jinong’s net sales, as compared to selling expenses of $8,142,911 or 14.0% of Jinong’s net sales for the six months ended December 31, 2016. The increase in Jinong’s selling expenses was due to Jinong’s expanded marketing efforts and the increase in shipping costs. The selling expenses of Yuxing were $20,144 or 0.5% of Yuxing’s net sales for the six months ended December 31, 2017, as compared to $18,975, or 0.5% of Yuxing’s net sales for the six months ended December 31, 2016. The selling expenses of Gufeng were $285,721 or 0.7% of Gufeng’s net sales for the six months ended December 31, 2017, as compared to $213,408 or 0.6% of Gufeng’s net sales for the six months ended December 31, 2016. The selling expenses of VIEs were $559,341, or 1.8%, of VIEs’ net sales or the six months ended December 31, 2017, as compared to $602,156, or 2.8% of VIEs’ net sales for the six months ended December 31, 2016.
Selling Expenses – amortization of deferred assets
Our selling expenses - amortization of deferred assets were 0 for the six months ended December 31, 2017, as compared to $9,584,220, or 7.9% of net sales, for the six months ended December 31, 2016. This decrease was due to the fact that all deferred assets were fully amortized and therefore no amortization was recorded on the fully amortized assets during the six months ended December 31, 2017.
General and Administrative Expenses
General and administrative expenses consisted primarily of related salaries, rental expenses, business development, depreciation and travel expenses incurred by our general and administrative departments and legal and professional expenses including expenses incurred and accrued for certain litigation. General and administrative expenses were $7,909,981, or 6.2% of net sales for the six months ended December 31, 2017, as compared to $7,865,392, or 6.5%, of net sales for the six months ended December 31, 2016, an increase of $44,589, or 0.6%.
Total Other Income and Expenses
Total other income and expenses consisted of income from subsidies received from the PRC government, interest income, interest expenses and bank charges. The total other expense for the six months ended December 31, 2017 was $732,991, as compared to $ 233,847 for the six months ended December 31, 2016, an increase of $499,144, or 213.4%. The increase in total other expense mainly resulted from the increase for bank charges and accretion expenses. The bank charges increased by $128,854 or 1207.4%, to $139,626 during the six months ended December 31, 2017 as compared to $10,672 during the six months ended December 31, 2016. Accretion expenses increased by $174,274 or 112.2%, to $329,609 during the six months ended December 31, 2017 as compared to $155,335 during the six months ended December 31, 2016.
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Income Taxes
Jinong is subject to a preferred tax rate of 15% as a result of its business being classified as a High-Tech project under the PRC Enterprise Income Tax Law (“EIT”) that became effective on January 1, 2008. Jinong incurred income tax expenses of $ 1,845,926 for the six months ended December 31, 2017, as compared to $1,879,465 for the six months ended December 31, 2016, a decrease of $33,539, or 1.8%.
Gufeng, subject to a tax rate of 25%, incurred income tax expenses of $ 1,159,097 for the six months ended December 31, 2017, as compared to $792,503 for the six months ended December 31, 2016, an increase of $366,594, or 46.3%. The increase is mainly due to the increase in net sales for Gufeng for the six months ended December 31, 2017 comparing to the same period of last year.
Yuxing had no income tax for the six months ended December 31, 2017 as a result of being exempted from paying income tax due to its products falling into the tax exemption list set out in the EIT.
Net Income
Net income for the six months ended December 31, 2017 was $12,868,283, a slight increase of $10,692, or 0.1%, compared to $12,857,591 for the six months ended December 31, 2016. Net income as a percentage of total net sales was approximately 10.2% and 10.7 % for the six months ended December 31, 2017 and 2016, respectively.
Discussion of Segment Profitability Measures
As of December 31, 2017, we were engaged in the following businesses: the production and sale of fertilizers through Jinong and Gufeng, the production and sale of high-quality agricultural products by Yuxing, and the sales of agriculture materials by the sales VIEs. For financial reporting purpose, our operations were organized into four main business segments based on locations and products: Jinong (fertilizer production), Gufeng (fertilizer production) and Yuxing (agricultural products production) and the sales VIEs. Each of the segments has its own annual budget about development, production and sales.
Each of the four operating segments referenced above has separate and distinct general ledgers. The chief operating decision maker (“CODM”) makes decisions with respect to resources allocation and performance assessment upon receiving financial information, including revenue, gross margin, operating income and net income produced from the various general ledger systems; however, net income by segment is the principal benchmark to measure profit or loss adopted by the CODM.
For Jinong, the net income decreased by $ 264,477, or 2.6% to $ 10,460,249 for six months ended December 31, 2017, from $10,195,772 for the six months ended December 31, 2016. The decrease was principally due to higher selling expenses.
For Gufeng, the net income increased by $ 1,492,367 or 75.2% to $ 3,477,292.48 for six months ended December 31, 2017 from $ 1,984,925 for six months ended December 31, 2017. The increase was principally due to the increase in net sales.
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For Yuxing, the net income decreased $89,368 or 18.3% to $ 398,491 for six months ended December 31, 2017 from $ 487,859 for six months ended December 31, 2017. The decrease was mainly due to the decrease in net sales.
For the VIEs, the net income was $ 199,680 for year ended December 31, 2017, decreased by $ 1,845,894 or 90.2%, from $2,045,574 for six months ended December 31, 2016. The decrease was mainly due to the increase in general and administrative expenses for the sales VIEs.
Liquidity and Capital Resources
Our principal sources of liquidity include cash from operations, borrowings from local commercial banks and net proceeds of offerings of our securities consummated in July 2009 and November/December 2009 (collectively the “Public Offerings”).
As of December 31, 2017, cash and cash equivalents were $145,417,158, an increase of $22,366,610, or 18.2%, from $123,050,548 as of June 30, 2017.
We intend to use some of the remaining net proceeds from the Public Offerings, as well as other working capital if required, to acquire new businesses, upgrade production lines and complete Yuxing’s new greenhouse facilities for agriculture products located on 88 acres of land in Hu County, 18 kilometers southeast of Xi’an city. Yuxing purchased a set of agricultural products testing equipment for the year of 2016. We believe that we have sufficient cash on hand and positive projected cash flow from operations to support our business growth for the next twelve months to the extent we do not have further significant acquisitions or expansions. However, if events or circumstances occur and we do not meet our operating plan as expected, we may be required to seek additional capital and/or to reduce certain discretionary spending, which could have a material adverse effect on our ability to achieve our business objectives. Notwithstanding the foregoing, we may seek additional financing as necessary for expansion purposes and when we believe market conditions are most advantageous, which may include additional debt and/or equity financings. There can be no assurance that any additional financing will be available on acceptable terms, if at all. Any equity financing may result in dilution to existing stockholders and any debt financing may include restrictive covenants.
The following table sets forth a summary of our cash flows for the periods indicated:
| Six Months Ended | ||||||||
| December 31, | ||||||||
| 2017 | 2016 | |||||||
| Net cash provided by operating activities | $ | 20,535,360 | $ | 18,178,990 | ||||
| Net cash used in investing activities | (23,086 | ) | (74,353 | ) | ||||
| Net cash provided by (used in) financing activities | (1,330,290 | ) | 300,000 | |||||
| Effect of exchange rate change on cash and cash equivalents | 3,184,627 | (4,726,271 | ) | |||||
| Net increase in cash and cash equivalents | 22,366,611 | 13,678,366 | ||||||
| Cash and cash equivalents, beginning balance | 123,050,548 | 102,896,486 | ||||||
| Cash and cash equivalents, ending balance | $ | 145,417,159 | $ | 116,574,852 | ||||
Operating Activities
Net cash provided by operating activities was $20,535,360 for the six months ended December 31, 2017, an increase of $2,356,370, or 13.0%, from cash provided by operating activities of $18,178,990 for the six months ended December 31, 2016. The increase was mainly attributable to an increase in accounts payable and decrease in advances to suppliers during the six months ended December 31, 2017 as compared to the same period in 2016.
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Investing Activities
Net cash used in investing activities for the six months ended December 31, 2017 was $23,086, an increase of $51,267, or 69.0%, compared to cash used in investing activities of $74,353 for the six months ended December 31, 2016. The difference was due to the fact that the Company purchased less plant, property and equipment during the last six months compared to the same period last year.
Financing Activities
Net cash used by financing activities for the six months ended December 31, 2017 was $1,330,290 compared to $300,000 net cash provided in financing activities for the six months ended December 31, 2016, which was largely due to $1,678,603 in repayment of loans for the six months ended December 31, 2017, compared to zero repayment of loans in the same period last year.
As of December 31, 2017 and June 30, 2017, our loans payable were as follows:
| December 31, | June 30, | |||||||
| 2017 | 2017 | |||||||
| Short term loans payable: | $ | 6,285,300 | $ | 7,678,111 | ||||
| Total | $ | 6,285,300 | $ | 7,678,111 | ||||
Accounts Receivable
We had accounts receivable of $136,066,642 as of December 31, 2017, as compared to $141,665,179 as of June 30, 2017, a decrease of $5,598,537 or 4.0 %. The decrease was primarily attributable to Gufeng’s accounts receivable. As of December 31, 2017, Gufeng’s accounts receivable was $46,610,891, a decrease of $18,552,537 or 28.5% compared to $65,163,428 as of June 30, 2017.
Allowance for doubtful accounts in accounts receivable for the six months ended December 31, 2017 was $13,949,452, from $9,457,423 as of June 30, 2017,and the allowance for doubtful accounts as a percentage of accounts receivable was 10.3% as of December 31, 2017 and 6.3% as of June 30, 2017.
Deferred assets
We had no deferred assets as of December 31, 2017, as compared to $864,070 as of June 30, 2017. During the six months, we assisted the distributors in certain marketing efforts and developing standard stores to expand our competitive advantage and market shares. Based on the distributor agreements, the amount owed by the distributors in certain marketing efforts and store development will be expensed over three years if the distributors are actively selling our products. If a distributor defaults, breaches, or terminates the agreement with us earlier than the contractual terms, the unamortized portion of the amount owed by the distributor is payable to us immediately. The deferred assets had been fully amortized as of December 31, 2017.
Inventories
We had inventories of $105,613,585 as of December 31, 2017, as compared to $78,013,891 as of June 30, 2017, an increase of $27,599,694, or 35.4%. The increase was primarily attributable to changes in Gufeng’s inventory. As of December 31, 2017, Gufeng’s inventory was $ 82,031,649, representing an increase of $26,312,857, as compared to $55,718,792 as of June 30, 2017.
Advances to Suppliers
We had advances to suppliers of $20,821,812 as of December 31, 2017 as compared to $24,023,062 as of June 30, 2017, representing a decrease of $3,201,250 or 13.3%. Our inventory level may fluctuate from time to time, depending how quickly the raw material is consumed and replenished during the production process, and how soon the finished goods are sold. The replenishment of raw material relies on management’s estimate of numerous factors, including but not limited to, the raw materials future price, and spot price along with its volatility, as well as the seasonal demand and future price of finished fertilizer products. Such estimate may not be accurate, and the purchase decision of raw materials based on the estimate can cause excessive inventories in times of slow sales and insufficient inventories in peak times.
Accounts Payable
We had accounts payable of $22,783,659 as of December 31, 2017 as compared to $19,643,897 as of June 30, 2017, representing an increase of $3,139,762, or 16.0%. The increase was primarily due to the increase of accounts payable for VIEs. They have accounts payable of $20,454,287 as of December 31, 2017 as compared to $18,355,921 as of June 30, 2017, representing an increase of $2,098,366, or 11.4%.
Unearned Revenue (Customer Deposits)
We had customer deposits of $6,935,326 as of December 31, 2017 as compared to $7,046,570 as of June 30, 2017, representing a decrease of $111,244, or 1.6%. The decrease was mainly attributable to VIE’s $ 718,647 unearned revenue as of December 31, 2017, compared to $1,375,785 unearned revenue as of June 30, 2017, caused by the advance deposits made by clients. This decrease was due to seasonal fluctuation and we expect to deliver products to our customers during the next three months at which time we will recognize the revenue.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. See Note 2 to our consolidated financial statements, “Basis of Presentation and Summary of Significant Accounting Policies.” We believe that the following paragraphs reflect the most critical accounting policies that currently affect our financial condition and results of operations:
Use of estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those estimates.
Revenue recognition
Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, we have no other significant obligations and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.
Our revenue consists of invoiced value of goods, net of a value-added tax (VAT). No product return or sales discount allowance is made as products delivered and accepted by customers are normally not returnable and sales discounts are normally not granted after products are delivered.
Cash and cash equivalents
For statement of cash flows purposes, we consider all cash on hand and in banks, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.
Accounts receivable
Our policy is to maintain reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Any accounts receivable of Jinong and Gufeng that are outstanding for more than 180 days will be accounted as allowance for bad debts, and any accounts receivable of Yuxing that are outstanding for more than 90 days will be accounted as allowance for bad debts.
Deferred assets
Deferred assets represent amounts the Company advanced to the distributors in their marketing and stores development to expand our competitive advantage and market shares. Based on the distributor agreements, the amount owed by the distributors in certain marketing efforts and store development will be expensed over three years if the distributors are actively selling our products. If a distributor defaults, breaches, or terminates the agreement with us earlier than the realization of the contractual terms, the unamortized portion of the amount owed by the distributor is to be refunded to us immediately. The deferred assets had been fully amortized as of December 31, 2017.
Segment reporting
FASB ASC 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other way management disaggregates a company.
As of December 31, 2017, we were organized into eleven main business units: Jinong (fertilizer production), Gufeng (fertilizer production), Yuxing (agricultural products production), Lishijie (agriculture sales), Jinyangguang (agriculture sales), Wangtian (agriculture sales), Xindeguo (agriculture sales), Xinyulei (agriculture sales), Fengnong (agriculture sales) and Xiangrong (agriculture sales). For financial reporting purpose, our operations were organized into four main business segments based on locations and products: Jinong (fertilizer production), Gufeng (fertilizer production) and Yuxing (agricultural products production) and the sales VIEs. Each of the segments has its own annual budget regarding development, production and sales.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CHINA GREEN AGRICULTURE, INC. | ||
| Date: March 16, 2018 | By: | /s/ Zhuoyu Li |
| Name: | Zhuoyu Li | |
| Title: | Chief Executive Officer | |
| (principal executive officer) | ||
| Date: March 16, 2018 | By: | /s/ Yongcheng Yang |
| Name: | Yongcheng Yang | |
| Title: | Chief Financial Officer | |
| (principal financial officer and | ||
| principal accounting officer) | ||
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EXHIBIT INDEX
| No. | Description | |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1+ | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2+ | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS* | XBRL Instance Document | |
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
| * | Filed herewith |
| + | In accordance with the SEC Release 33-8238, deemed being furnished and not filed. |
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